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Stability supports bond yields and equity prices

Yields edged slightly higher during the holiday-shortened trading week as U.S. markets regained some stability.  The stimulus provided by the federal government and the Federal Reserve combined to put a floor under equity prices and bond yields for now.  The Federal Reserve announced additional stimulus during the week, extending their asset-buying programs to include top-rated tranches of collateralized loan obligations (CLOs) and some speculative-grade (or junk) bonds. 

The Federal Reserve is now a buyer of nearly every type of fixed income product, as they already committed to purchasing Treasuries, agency mortgages, municipal bonds, and asset-backed securities.  The week's economic data continued to highlight the economic impact of the efforts to combat the coronavirus.  The week's 6.6 million new jobless claims means that approximately one in 10 American workers has filed for unemployment insurance over the past three weeks.

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